Peru to become 2nd country to exit IMF credit program

Washington: Peru will become only the second nation to exit an IMF support program later this month, the Washington-based lender said Tuesday, citing the country's "strong economic fundamentals."

The South American country will exit the Flexible Credit Line (FCL) when it expires on Sunday, the International Monetary Fund said in a statement -- making it the first country to do so since Poland became the first to exit the program in 2017.

The International Monetary Fund set up the FCL in 2009 to provide financial support to emerging economies with strong macroeconomic fundamentals, helping them meet balance of payment needs during times of crisis and boosting market confidence.

Peru entered the IMF's FCL program at the start of Covid-19 pandemic in May 2020, opening up an emergency credit line -- which it never used -- of around $10 billion that was later reduced by half.

"The IMF's Executive Board commended the authorities for very strong economic fundamentals and institutional policy frameworks, a sustained track record of implementing very strong macroeconomic policies despite political turmoil," the IMF said in a statement.

In an updated economic forecast, the Fund said it now expects Peru's economy to rebound from last year's twin challenges of "climate-related shocks and social turmoil" and to grow by 2.5 percent this year.

This growth will be "supported by a strong recovery in agriculture and fishing, continued momentum in mining, and a looser monetary policy stance," it continued, adding that inflation is also expected to ease.